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There are a lot of professional investment people out there who have no idea about the private market in information. They still digest all their news from official sources and consider things like Twitter noise or unsubstantiated rumourtrage that can't be trusted without ever having tried it themselves.

They are at a huge disadvantage and have missed major trends as a result and don't even realize it.

Meanwhile, watching the Cyprus drama unfold, Weisenthal says that "the Twittersphere has come to the rescue" of any investor starved for good sell-side research:

The value of Twitter (and Twitterers' blogs) have been growing for some time.

But on a weekend, with a high degree of local knowledge and nuance required, the best information out there was all free.

All of this is true, and especially true with respect to Cyprus -- a country which is far too small to have dedicated sell-side coverage. Precious few bank analysts will have good contacts within Cypriot policymaking circles, or even be able to name a single Cypriot policymaker. Which means that everybody's pretty much starting from the same place, giving a big advantage to the iterative and conversational way in which knowledge builds on Twitter.
My post over the weekend had 21 different external links, most of which came from Twitter in one way or another.

More generally, if you're an investor who wants to avoid being blindsided by something huge you were utterly unaware of, Twitter is a great tool for minimizing that risk. That's thanks in large part to its short attention span: By its nature it flits randomly from topic to topic, making it a fantastically good serendipity engine, better than any other source at showing you stuff you didn't know you wanted to know.

Kaminska points out that journalists, rather than investors, are at the edge of the envelope here, and cites Weisenthal in particular as being the person who "sets the benchmark for what the human brain is capable of absorbing."

Information is power. You can choose to ignore it and get behind, but this is a market like anything else. And you can't stop or shut it down just because you can't keep up. Only the strongest and best at absorbing and processing all this information will survive.

This is why bloggers and journalists like us (those using social media rather than those using old techniques) become so insightful. We do the reading so you don't have to.

But guess what? The amount of material we consume on a daily basis relative to the investment community which still operates on 1990s information terms (a research note here, a pontification there, a look at the newspaper -- yesterday's news, tomorrow ) makes me realize the scale of the power chasm that is forming between the informed, those who know and do exploit the information available, and the uninformed, who don't because it gets in the way of their quality of life.

Of course, there are some investors who are extremely adept at drinking from the fire hose. And there are other investors who specialize in taking very, very deep dives into very narrow asset classes, often just a single stock, trying to monetize their information advantage that way. But most investors are much more broadly exposed than that, and need to stay on top of what is happening, globally, in a world which can change with dizzying speed. And as Kaminska says, there are a lot of "old school money managers" who simply don't have the skill set to do that.

There's still, however, the question of what people do with the information they get from the rapidly proliferating set of sources which are freely available online. Weisenthal and Kaminska are both very smart, but that doesn't mean I'd be likely to give them my money to invest on my behalf. A large part of investing is knowing when to wait, in a world which is always biased towards action. Another large part is being able to step back and see the big trends, without spending too much time being distracted by noise. And yes, for all that it's incredibly valuable, Twitter is also incredibly noisy.

If Kaminska's point is about the kind of money managers whose investment services are sold rather than bought -- individual stockbrokers, fund-of-funds managers, that kind of thing -- then it's well taken. And if you're a sell-side analyst, Twitter is great at helping to prepare you for just about any question which might get thrown at you. But if she's talking about purer investors, like mutual fund or hedge fund managers or family offices or even just individual investors, then I think we're still quite a way from the point at which being on Twitter is a necessity. Some people love it, and get value out of it, and become better investors through it: all power to those people. For others it's a noisy distraction in a world where there's never enough time to think deeply about complex issues.

The people I respect the most in the financial-services industry tend to be the ones with both breadth and depth. I don't know whether David Rolley of Loomis Sayles has ever spent any time on Twitter, but I know that he has a protean yet focused intelligence which seems perfectly suited to his job. On the other hand, being on Twitter is hardly disqualifying: I would put
Dan Davies and
Mark Dow in the same category, and they're both must-follows on Twitter, who surely receive as much from the service as they give to the rest of us.

There's a reason why journalists flock to Twitter: They cover news, and Twitter is always new. They also, however, nearly always overestimate the importance of news to the markets. What's happening in Cyprus might be very important when it comes to making investment decisions, but that doesn't mean those decisions need to be made right now. Investing, along with providing valuable information to investors, which is what sell-side research desks do, involves much more than staying on top of current events: they also act as a screen, passing on only the stuff which is important, and identifying the securities which are most tied to the event in question. Twitter is very good for sentiment analysis, but it's pretty horrible as a source of trading or hedging ideas.

All of which is to say that while I'm sure there are many investors out there who would be lost without Twitter, there are surely just as many for whom it would be little more than an unhelpful and noisy distraction. The great thing about Twitter is that the value and the conversation take place among people who want to be there. Telling people that they have to be there, or else they're missing out, is actually not helpful. Because the one thing we can probably all agree on is that people who feel obliged to be on Twitter are very unlikely to either contribute or receive much of value at all.

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